Euro Zone Inflation Expectations Remain Unchanged

The European Central Bank (ECB) has released its latest survey, showing that inflation expectations in the Euro Zone have remained broadly unchanged over the past three months. According to the survey, price growth is expected to fall quickly next year before returning back to the 2% target in 2028.

Inflation has been running at about 3% for months due to surging energy costs, but most economists believe that this will not lead to sustained rapid inflation or second-round effects yet. The survey shows that inflation averaging 2.7% this year is unchanged from the previous projection, while the 2027 figure was raised to 2.2% from 2.1%. Inflation is expected to hit 2% in 2028 and stay there.

The ECB left interest rates unchanged on Thursday as economic growth remained lukewarm, and fresh survey projections highlighted this weakness. Growth this year is seen at 0.6%, below the 1.0% projected three months earlier, while next year's growth was lowered to 1.2% from 1.3%. The ECB clearly hinted at possible tightening ahead, possibly as soon as September.